DEPRESSION IN MELBOURNE.

Otago Witness, Issue 1933, 12 March 1891, Page 6

DEPRESSION IN MELBOURNE.

STOCK EXCHANGE DULLNESS. HEAVY LOSSES BY FINANCIAL COMPANIES. (Fbom Oca Own Cobbespondent.) Melbourne, February 17. Melbourne is passing through a decidedly dull period. Some people blame the strike and some the weather ; bat though both are contributory causes, the real trouble is that we are inheriting a legacy of the " boom." The surest indicator of the scarcity of money is the tightness on the Stock Exchange. Here there is absolutely no business doing. Before New Year, when Broken Hill silver kept dropping steadily, we were told there would be a change after the holidays, when if Broken Hill did not boom again, at least Tasmania would. A mild flutter in T&smanian silver stocks did set in, principally arising oat of the visit of Melbourne speculators to the tight little island at Christmas and New Year, bat ifc was short lived, and shares have lost all their rise, and are actually lower than they were before the. rise occurred. The Broken Hill stocks have gone down with a monotonous persistence, and one shudders to think what some people mast have lost. Investment stocks, too, have suffered. Even the favourite trams (Melbourne Tramway and Omnibus Company) keep steadily going downward. It does nob arise so much from want of confidence as from want of money. The brokers are suffering, and only to-day it is hinted in the press that several of them are failing to meet engagements. Their names are not mentioned, but are perfectly well known in Collins street. For some time, also, the affairs , of a well-known business man, who recently had to resign a high political office, have been affording his creditors some concern. His difficulties are directly the result of the land boom period, bis speculations iv real estate having been disastrous. As his liabilities reach close on , half a million, his downfall, if things come to the worst, will be a big blow. Another example of land boom legacies is afforded by the meetings lately of two or three companies — creations of that flourishing period. The People's Freehold and Investment Company is to be wound np. Its affairs are not in a condition of complete collapse. It was still able to pay a dividend of 10 per cent, for the half-year, bat the shareholders seemed to look forward to worse times. Some light is perhaps thrown on matters by the answer of the chairman (Dr Le Fevre, M.L.C.) to a shareholder. " In answer to Mr Blair, the chairman stated that • Shares in other institutions,' which appeared as an asset for £5393, were taken at cost price. If realised at present, there would probably be a loss of at least £2000 upon them." The company's own shares, which some 12 months ago were worth 265. had gone down as low as 13s or 14". The shareholders therefore found no difficulty in agreeing to wind up, though it is pretty evident that they are to lose considerably in the process. The experience of the Australian Financial Agency and Guarantee Company (Sir Benjamin Benjamin, M.L.C.) is a great deal worse. To begin with, their late manager, a Mr Cuddy (now in Pentridge) " def alcated" to the very tidy extent of £12,344, and other losses had been incurred, in a great part owing to the " gross misrepresentations " of the same individual, which necessitated a farther sum of £27,832 being written off the capital. Through Mr Cuddy, therefore, the company lost £40,000. His method of procedure appears to have been the making of the most reckless' advances on the most "wild cat" security. What on earth the directors were doing and where were the auditors, are questions the shareholders ask in vain. Bat this was net all. The directors had managed to lose another £20,000 in addition, so that, oat of a paid-up capital of £100,000, only £40,000 remained with which to carry on the business of the company. The shareholders were assured this was " the worst possible view " of>fiairs, but there is only too frequently •• more behind " in snob, concerns. However, the admissions are bad enough in all conscience. In a third company matters are only a little, very little, better. This is the Victoria Finance, Guarantee, and Share Company— a creation of that prince of land boom speculators, Sir M. H. Davies, the Speaker of the General Assembly. The assets of this company are principally real estate and shares in other institutions. I will quote from the chairman's speech: — "When the market in all sorts of stock rose, real estate rose too, and the directors advanced the properties on the books of the company accordingly, and also the shares. When some of the new members joined the board they thought it only fair that a readjustment of valuation should be made, but others thought it better to keep -on a little longer in the hope that things would improve. That coarse was adopted, but as there was no improvement apparent, they now thought it better to write the properties down to their market value. They had therefore written off to the extent of £29,394, which practically amounted to the whole of the reserve fund and £2000 from the profit and loss account &b well. Besides this, some of the companies in which they were largely interested had not paid a dividend this half-year, and that had also thrown them back." A pleasant thing, ia it not, to be a shareholder in a company of this kind ? As I -have said, it was one of Sir M. H. Davies' creations, and some day perhaps light may be thrown on the true history of its inception, and on that worthy knight's connection with this and other companies. The subject is not altogether a safe one on which to write. I may add, however, the closing remark of the chairman :— " Sir M. H. Davies was not directly connected with the company, but he was always ready to be consulted about its welfare, and in fact, directly and indirectly, he owned one-third of the company." It willserve to show that the above description of the financial stagnation is by no means exaggerated. To quote the stock exchange report from this morning's Argus:— "Bank shares and other investment stocks have mostly very limited business, but Melbourne Tramway and Omnibus were again freely pressed on the market, and changed hands to large extent at further reduced prices. Real Estate Bank and Tarrawingeo Flux also quitted at much lower prices. Melbourne Tramway and Omnibus, 86s to 82s, recovering to 83s at close. Gold companies without important changes generally. The market for silver companies' shares was the lowest for a long time past, very heavy reductions taking place in all the principal Broken Hill companies, but towards the close there was less pressure to sell, and improved prices were paid, though still leaving quotations much under last week's rates."

The Ravensbourne and Rothesay School Fenny Savings Bank, though it has been in existence only one month, has 76 depositors, the amount deposited being £11 4s lid.

The Westport Coal Company's tender for the supply of coal at 24s 33 per ton has been accepted by the Manawatu Railway Company. This company uses a large amou-t of firewood for its engines.